Tag Archives: Strategy Execution

Benefits realisation management and strategy execution

Introduction – context for benefits realisation

Over the last few decades, organisations have gradually developed a general understanding that all projects are investments (mainly in organisational change) and consequently the potential realisation of expected/desired benefits have been increasingly recognised as the main driver for organisations in making their investment decisions.

Therefore, from an investment perspective, we clearly see the relationship between project success and benefits realisation. In other words, a project succeeds when the benefits expected from the investment made are realised. That makes a lot of sense in a world that is mainly profit oriented, where the goals are to maximise efficiency, effectiveness and therefore return on investment.

In the past, projects had their success directly related to the delivery of outputs, which do not guarantee any return on investment and consequently may not link back to the benefits case (which, in the early days of the project lifecycle, had supported the investment decision). It is encouraging to see that organisations are becoming more mature in making investment decisions. However, the revolution needs support.

Researchers and practitioners have been employing a number of techniques –old and new– to manage the journey from the business case to the full realisation of the expected benefits. The management of such journey has been found to be a strong driver for project success from a strategic perspective (Serra & Kunc, 2015). Contributions has been developed around benefits realisation management – that is also called benefits management– which is a relatively new area of knowledge directly linked to project management but it has its roots into operations management and business strategic management.

Programme and project success leads to business success

Although there are contributions towards being more successful in managing programmes and projects, not so much progress has been made in linking these benefits realisation management practices to the execution of business strategies and, in consequence, to the success of the organisation in achieving its goals. If we consider programmes and projects to be investments, the success of an organisation depends on how well their programmes and projects will enable the realisation of any expected benefits, because this is going to tell us if the investment was worth or not.

Thus, benefits realisation management can be applied not only to ensure that individual programmes and projects deliver the enablers for the realisation of desired benefits, but on a more strategic level to ensure that the organisation generates the value that has been planned as its main strategic goal.

Benefits realisation management supporting business success

Based on the above ideas, we believe benefits realisation management can be employed to support the strategy execution and ensure the achievement of strategic goals. To do so, as a starting point, a number of organisations have developed and implemented an enterprise level benefits realisation framework that standardises the processes, tools and approach for benefits realisation. The framework enables the organisation to manage the variety of benefits that are expected to be enabled by all its programmes and projects in a standard and centralised way. The framework enables organisations also to produce an enterprise level benefits realisation strategy, which guides the selection and prioritisation of programmes and project according with the overall business strategy.

More than that, by having such type of frameworks and strategies in place, organisations can more easily integrate the management of their investments in organisational change – projects and programmes – to the management of their operations – or business as usual. This creates strong and clear links that enable full control over the process of delivering change as part of programme and projects, and then later realising benefits as part of day-to-day business operations.

By having such processes in place, organisations can also be able to use sophisticated decision making support systems (based on proven decision analytics tools) to provide better options regarding the portfolio of in-flight investments. The logic for the decision making support systems can be easily derived from the benefits realisation strategy. With this kind of tool in place, decisions to stop a project or to change the delivery approach (prioritisation) in order to maximise the benefits to be achieved can be made more easily once it is supported by structured information and timely warnings.

Conclusion

The old focus about delivering projects on time and budget as the main success criteria for investments in projects has to change to a focus of realising benefits that justify the investment on the project. This approach is supported by a series of frameworks, tools and techniques that enable organisations to manage benefits realisation at programme and project level. We expect the approach to keep evolving into an even more strategic focus on managing the creation of value to the organisation through comprehensive project management, which integrates portfolio management, programme management and project management with operations in order to ensure success in the execution of business strategies.

Authors: Carlos Eduardo Martins Serra, MSc, PMP; Martin Kunc, PhD

Post 8 - PMI UKImportant note: This article was originally published by PMI UK at the June 2016 edition of its newsletter and has been republished here in full with authorisation from the PMI UK Communications Director.

————————————————————————————————————-

Carlos SerraCarlos Serra is a certified PMP (PMI), APMP (APM) and Prince2 Practitioner, holding an MSc degree in programme and project management (University of Warwick) and a BSc degree in production engineering (CEFET-RJ/Brazil). Since 1999, he has been working in project management across a variety of market sectors, countries and roles. On the academic side, he has designed and delivered project management lectures and presentations for MBA programmes, conferences and training courses, written articles, won academic and professional awards and worked as a journal reviewer. His book about Organizational Benefits Realisation Management will be launched in the next few months by CRC Press.

 

Martin KuncDr Martin Kunc is Associate Professor in Management Science at Warwick Business School and has a PhD in Decision Science from London Business School. His research interests are in the area of strategic planning, systems modelling and managerial decision making. He has published more than 25 articles in diverse journals such as Strategic Management Journal and Management Decision. He has performed consulting projects in diverse industries in strategic management issues.

————————————————————————————————————-

Links to PMI UK social networks:

Facebook: https://www.facebook.com/PMI-UK-155793311201639/

Twitter : https://twitter.com/PMI_UK_Chapter

LinkedIn: https://www.linkedin.com/company/pmi-uk-chapter

 

Enterprise Benefits Realization Strategy: laying the foundations to maximize return on investment

When in high school I first heard about a cost-benefit analysis, it made a lot of sense to me that every investment (i.e. cost) made by a person or organization is expected to generate some type of return (i.e. benefit). That was probably the first time when I understood benefits in a logical and mathematical sense rather than in a generic and intangible way.

Later on, as a project planner, I developed an even better understanding that a project is an investment that is usually subject to some type of feasibility assessment, where the benefit-cost ratio is expected to be as greater than 1 as possible. This means the project is being expected to generate financial benefits that are as much greater than the costs as possible. The result of this type of analysis along with an assessment of the strategic alignment of the initiative is what drives organizations to make investment decisions.

Nevertheless, later working as a project manager, I learnt that a lot of the logical rationale that sponsors and business analysts develop to support the business case (or benefits case) in driving the investment decision might not be exactly what we are going to experience in reality. From a project manager’s perspective, this could be (erroneously) considered something acceptable that does not require any further actions by having in mind that project managers are unlikely to be around when benefits are realized, since project products have already been delivered and then the responsibility to make benefits happen has been passed across to someone else who is outside of the project organization. Although it doesn’t sound fair, in reality project managers are most times not responsible for realizing any benefits, which makes sense since benefits are realized mostly after project closure.

Therefore, we have gotten to a challenging scenario where project managers deliver products while organizations are actually expecting benefits to be realized, whereas investors are expecting organizations to generate profit. In this scenario, who tracks the benefits all across the entire lifecycle of the project products to make sure they really happen as planned?

Years later, by leading a business processes and business performance management team, I realized how important it is for an organization to have someone monitoring the performance of their key value-adding processes and also tracking the real impacts (benefits) of any investment initiatives (projects) on the performance baselines. This is really crucial and can be done by a number of organizational roles, for example by a business process owner, by a project-sponsoring function, or by a (sometimes independent and cross-functional) business process management or business performance management department.

If we understand the business strategy as a plan that drives the changes to the existing organizational environment towards the achievement of business process performance targets by creating new capabilities or by improving existing ones, we easily identify the need for a strong alignment between project delivery and business-as-usual (BAU) operations in order to be successful in implementing the business strategies.

Over the last decade, while working with a number of portfolio level PMOs, it has become even clearer to me how valuable for an organization it can be to have in place strategic or tactical PMOs. Such PMOs provide support to the project portfolio on the alignment between BAU, strategy, and project delivery in realizing benefits during the program/project lifecycles and consequently in handing over this responsibility to another organizational role that will track business process performance and benefits in BAU. I also realized how challenging this task can be if not well framed by an overall strategy that guides the straight alignment between the roles and processes mentioned here.

Based on the scenario described above, we can highlight three key groups of roles that are expected to work together in order to maximize return on investment. These are related to: ( 1) benefits realization governance, (2) program and project delivery, and (3) benefits ownership.

Key roles

Key groups of roles for Enterprise Benefits Realization Management

That is where an Enterprise Benefits Realization Strategy comes into place. In addition to clarifying the set of processes and tools to be employed for benefits realization management, it provides a clear pathway for the organization to get from the design of a variety of strategic initiatives to the actual achievement of strategic goals. It translates the value of each initiative into tangible and measurable indicators that enable PMOs and business process management departments or business performance management departments to work in alignment to support projects and regular operations (BAU) in executing the business strategy, and then in delivering value to shareholders and any other key stakeholders.

 

——————————————————————————————————————————–

This article was originally published at the website Accelerating IT Success, on 27th May 2016.

Learn more about this topic by watching the webinar Implementing an Enterprise Benefits Realization Management Strategy, to be released on 2nd June 2016.

More on this topic will be also available in a book from the same author to be released in the third quarter of 2016.